'Japanese Ikea' makes room for itself

Nov. 12, 2013

Updated Nov. 13, 2013 6:18 a.m.

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Aki-home has opened two stores in Orange County, this one in Tustin at The District, located next to Whole Foods, and another in Fullerton, in October. These two stores are the first U.S. locations for Nitori, a big furniture chain in Asia. LEONARD ORTIZ, ORANGE COUNTY REGISTER

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A wide selection of home interior products are available at the Tustin Aki-Home store. LEONARD ORTIZ, ORANGE COUNTY REGISTER

Aki-home has opened two stores in Orange County, this one in Tustin at The District, located next to Whole Foods, and another in Fullerton, in October. These two stores are the first U.S. locations for Nitori, a big furniture chain in Asia.LEONARD ORTIZ, ORANGE COUNTY REGISTER

A Japanese retail giant has set its sights on winning over the U.S. furniture and home goods market – beginning with Orange County.

Two Aki-Home stores opened this fall at the Amerige Heights shopping center in Fullerton and the District in Tustin, moving into desolate shells formerly occupied by a 20,000-square-foot Old Navy and a 30,000-square-foot Best Buy.

Aki-Home's wide aisles, pricing and expansive inventory are a cross between Ikea and Bed Bath & Beyond – with an urban Japanese design twist.

Many of the 10,000 products on sale are from the Japanese catalog, though the company is experimenting with exclusive merchandise for U.S. customers, scouring the country for product trends (counter-height dining tables) and new colors (emerald, Pantone's color of the year) to add to the mix.

At the Fullerton store, a snow-white leather sectional ($1,490) is displayed at the entrance, along with an eye-catching polka dot area rug ($119.99) and color-coordinated decorative pillows (pillow forms and changeable covers are $3.99 and up). King-size bed frames sell for $450, 8-inch fry pans for $4.99.

“We've been very happy with customer feedback,” said David Finch, Aki-Home's marketing and merchandising manager. The sectional has been a best-seller despite a higher price point. At the other end of the spectrum, tableware (99 cents to $2.49 per item) in the shape of a cherry blossom is flying off the shelves, and customers are clamoring for more colors. “Everyone can appreciate the popular pricing, but the store environment is also smaller and friendlier than an Ikea.”

‘Room to grow here'

Finch, employee No. 4 at the Aki-Home headquarters in La Palma, joined in January from retail operations at Disneyland to help craft human resources and customer-service guidelines that might be lost in translation. He helped write refund policies and interviewed approximately 4,000 applicants for about 120 full-time and part-time positions at the two stores, which opened within a week of each other.

“We are looking for many more locations. The demographics in Orange County are perfect for us, and there's a lot of room to grow here,” Finch said, adding that the plan is to add a handful of new stores in Southern California next year.

Aki-Home's parent company, Nitori Holdings, operates 301 Nitori-branded stores across every prefecture, or region, in Japan, plus 16 more in Taiwan. The U.S. expansion is just the latest example of a successful Japanese brand looking overseas for a new opportunity.

“It's a very interesting overall trend that has been gaining momentum over the past four or five years,” said Dominic Carter, president and CEO of Tokyo-based market-research firm CarterJMRN KK. “This expansion of Nitori's, on the heels of the success of better-known Japanese retailers such as Muji and Uniqlo, is a natural progression of this.”

Carter describes Nitori as a “well-known mass-market brand” with a good reputation and a strong online presence that differentiates it from competitors – a strategy that could be leveraged to provide an edge in the U.S. as well.

‘Center for trends'

Tetsuo Kumon, chief financial officer of Aki-Home and an executive officer for Nitori Holdings, said the company chose Southern California for its stateside launch because founder and President Akio Nitori considers the region a “center for trends,” and sends about 800 employees a year here for market-research purposes.

It's a tradition that began in 1972, when Nitori himself visited the Los Angeles area to seek inspiration for his struggling 1,000-square-foot furniture shop on the north island of Hokkaido. He spent a week soaking in U.S. chain-store principles like affordable pricing and deeper selection, and took those retail practices back home.

The result? “We are absolutely dominant in Japan. We have increased sales for 26 years consecutively,” said Kumon, citing sales of more than $3.5 billion and nearly 5 million customers in the 12-month period ending in February. The company also controls a great deal of the logistics and supply chain, with warehouses and factories across Asia.

“Nitori said he'd like to have 1,000 stores in the U.S. in 20 years, and we have to expand to the East Coast, to Texas, to do that,” Kumon said. “This is the beginning of what we hope for. We are now in the beginning of the holiday season, the economy is picking up, and people are more aggressive to improve their houses. We expect we will be busier.”

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